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On November 25, 1987, Perez died in an accident. He was riding in a banca which
capsized during a storm. At the time of his death, his application papers for the additional
VIRGINIA A. PEREZ, petitioner, insurance of P50,000.00 were still with the Gumaca office. Lalog testified that when he
vs. went to follow up the papers, he found them still in the Gumaca office and so he
COURT OF APPEALS and BF LIFEMAN INSURANCE CORPORATION, respondents. personally brought the papers to the Manila office of BF Lifeman Insurance Corporation.
It was only on November 27, 1987 that said papers were received in Manila.
YNARES-SANTIAGO, J.:
Without knowing that Perez died on November 25, 1987, BF Lifeman Insurance
A contract of insurance, like all other contracts, must be assented to by both parties, Corporation approved the application and issued the corresponding policy for the
either in person or through their agents and so long as an application for insurance has P50,000.00 on December 2, 1987. 4
medical examination, which he passed. 3 WHEREFORE PREMISES CONSIDERED, judgment is hereby rendered in favor
of defendant Virginia A. Perez, ordering the plaintiff BF Lifeman Insurance
Pursuant to the established procedure of the company, Lalog forwarded the application Corporation to pay to her the face value of BF Lifeman Insurance Policy No.
for additional insurance of Perez, together with all its supporting papers, to the office of 056300, plus double indemnity under the SARDI or in the total amount of
BF Lifeman Insurance Corporation at Gumaca, Quezon which office was supposed to P150,000.00 (any refund made and/or premium deficiency to be deducted
forward the papers to the Manila office. therefrom).
SO ORDERED. 5
The trial court, in ruling for petitioner, held that the premium for the additional insurance Consent must be manifested by the meeting of the offer and the acceptance upon the
of P50,000.00 had been fully paid and even if the sum of P2,075.00 were to be thing and the cause which are to constitute the contract. The offer must be certain and
considered merely as partial payment, the same does not affect the validity of the policy. the acceptance absolute.
The trial court further stated that the deceased had fully complied with the requirements
of the insurance company. He paid, signed the application form and passed the medical When Primitivo filed an application for insurance, paid P2,075.00 and submitted the
examination. He should not be made to suffer the subsequent delay in the transmittal of results of his medical examination, his application was subject to the acceptance of
his application form to private respondent's head office since these were no longer within private respondent BF Lifeman Insurance Corporation. The perfection of the contract of
his control. insurance between the deceased and respondent corporation was further conditioned
upon compliance with the following requisites stated in the application form:
The Court of Appeals, however, reversed the decision of the trial court saying that the
insurance contract for P50,000.00 could not have been perfected since at the time that there shall be no contract of insurance unless and until a policy is issued on this
the policy was issued, Primitivo was already dead. Citing the provision in the application
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application and that the said policy shall not take effect until the premium has
form signed by Primitivo which states that: been paid and the policy delivered to and accepted by me/us in person while
I/We, am/are in good health. 9
The petition is bereft of merit. ground that the contract for annuity was not perfected since it had not been proved
satisfactorily that the acceptance of the application ever reached the knowledge of the
Insurance is a contract whereby, for a stipulated consideration, one party undertakes to applicant.
compensate the other for loss on a specified subject by specified perils. A contract, on
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the other hand, is a meeting of the minds between two persons whereby one binds Petitioner insists that the condition imposed by respondent corporation that a policy must
himself, with respect to the other to give something or to render some service. Under 8 have been delivered to and accepted by the proposed insured in good health is
Article 1318 of the Civil Code, there is no contract unless the following requisites concur: potestative being dependent upon the will of the corporation and is therefore null and
void.
(1) Consent of the contracting parties;
We do not agree.
(2) Object certain which is the subject matter of the contract;
A potestative condition depends upon the exclusive will of one of the parties. For this
(3) Cause of the obligation which is established. reason, it is considered void. Article 1182 of the New Civil Code states: When the
fulfillment of the condition depends upon the sole will the debtor, the conditional policy was issued on December 2, 1987. Under these circumstances, we hold that the
obligation shall be void. delay could not be deemed unreasonable so as to constitute gross negligence.
In the case at bar, the following conditions were imposed by the respondent company for A final note. It has not escaped our notice that the Court of Appeals declared Insurance
the perfection of the contract of insurance: Policy 056300 for P50,000.00 null and void and rescinded. The Court of Appeals
corrected this in its Resolution of the motion for reconsideration filed by petitioner, thus:
(a) a policy must have been issued;
Anent the appearance of the word "rescinded" in the dispositive portion of the
(b) the premiums paid; and decision, to which defendant-appellee attaches undue significance and makes
capital of, it is clear that the use of the words "and rescinded" is, as it is hereby
(c) the policy must have been delivered to and accepted by the applicant while declared, a superfluity. It is apparent from the context of the decision that the
he is in good health. insurance policy in question was found null and void, and did not have to be
"rescinded".13
The condition imposed by the corporation that the policy must have been delivered to
and accepted by the applicant while he is in good health can hardly be considered as a True, rescission presupposes the existence of a valid contract. A contract which is null
potestative or facultative condition. On the contrary, the health of the applicant at the time and void is no contract at all and hence could not be the subject of rescission.
of the delivery of the policy is beyond the control or will of the insurance company.
Rather, the condition is a suspensive one whereby the acquisition of rights depends upon WHEREFORE, the decision rendered by the Court of Appeals in CA-G.R. CV No. 35529
the happening of an event which constitutes the condition. In this case, the suspensive is AFFIRMED insofar as it declared Insurance Policy No. 056300 for P50,000.00 issued
condition was the policy must have been delivered and accepted by the applicant while by BF Lifeman Insurance Corporation of no force and effect and hence null and void. No
he is in good health. There was non-fulfillment of the condition, however, inasmuch as costs.1âwphi1.nêt
the applicant was already dead at the time the policy was issued. Hence, the non-
fulfillment of the condition resulted in the non-perfection of the contract. SO ORDERED.
As stated above, a contract of insurance, like other contracts, must be assented to by Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.
both parties either in person or by their agents. So long as an application for insurance
has not been either accepted or rejected, it is merely an offer or proposal to make a
contract. The contract, to be binding from the date of application, must have been a
completed contract, one that leaves nothing to be done, nothing to be completed, nothing
to be passed upon, or determined, before it shall take effect. There can be no contract of
insurance unless the minds of the parties have met in agreement. 11
Prescinding from the foregoing, respondent corporation cannot be held liable for gross
negligence. It should be noted that an application is a mere offer which requires the overt
act of the insurer for it to ripen into a contract. Delay in acting on the application does not
constitute acceptance even though the insured has forwarded his first premium with his
application. The corporation may not be penalized for the delay in the processing of the
application papers. Moreover, while it may have taken some time for the application
papers to reach the main office, in the case at bar, the same was acted upon less than a
week after it was received. The processing of applications by respondent corporation
normally takes two to three weeks, the longest being a month. In this case, however, the
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